ING Direct 2004 Annual Report Download - page 16

PROFIT AND LOSS ACCOUNT
in millions of euros 2004 2003 change comparable*
Premium income 11,369 11,401 -0.3% 2.6%
Operating expenses 1,832 1,815 0.9% 10.9%
Operating profit before tax 1,733 1,791 -3.2% 4.6%
* Comparable change = excluding foreign exchange differences, acquisitions and
divestments, and one-offs.
KEY FIGURES
2004 2003
Value of new life business (in millions in euros) 138 94
Internal rate of return 12.4% 10.9%
Embedded value life business (in millions in euros) 12,257 11,503
INSURANCE EUROPE1.2
OUR PERFORMANCE
Insurance Europe’s result was influenced by lower profits in the
Netherlands. A favourable development was that large-scale
investments to improve the service of the Dutch insurance unit
Nationale-Nederlanden began to bear fruit, with the company
succeeding in improving customer satisfaction levels and
increasing the value of new life insurance business. In Belgium,
our insurance activities showed a strong sales performance.
In Central Europe, we continue to be the largest international
provider of life insurance products and we created value in
existing and new life business.
FINANCIAL DEVELOPMENTS
Operating profit before tax from Insurance Europe fell 3.2%
to EUR 1,733 million. This decline was caused by lower results
from life insurance in the Netherlands which could not be
offset by higher results from the life businesses elsewhere in
Europe and from non-life activities. The external environment
for non-life was favourable, as demonstrated by the relatively
low number of claims.
Insurance Europe encompasses the insurance and asset
management activities in the Netherlands, Belgium and
Central Europe, which account for respectively around 82%,
7% and 11% of operating profit before tax and 66%, 21%
and 13% of premium income. Overall, around 82% of
Insurance Europe’s profits originate from life insurance
businesses and 18% from non-life.
Total premium income declined 0.3% to EUR 11,369 million,
due to a 6.2% drop in non-life premium income, as a result
of the sale of the Dutch health insurance business.
Operating expenses increased 0.9% to EUR 1,832 million as
the impact from divestments helped to offset higher expenses
in the Netherlands. Excluding those divestments, operating
expenses rose 10.9%. The higher expenses in the Netherlands
stemmed from extra costs for external staff, investments
in new IT systems, a restructuring provision to improve
service, and costs to comply with Dutch legislative changes
at Nationale-Nederlanden.
OPERATING PROFIT
BEFORE TAX
in millions of euros
Insurance Europe 22% 1,733
Rest of ING 78% 5,686
GEOGRAPHICAL BREAKDOWN
OF PREMIUM INCOME
in millions of euros
Netherlands 66% 7,516
Belgium 21% 2,439
Rest of Europe* 13% 1,414
Total 100% 11,369
*Poland, Hungary, Czech Republic, Slovakia,
Romania, Bulgaria, Greece and Spain
PROGRESS IN VALUE CREATION AND CUSTOMER SATISFACTION
14 ING Group Annual Report 2004